Madoff investment scandal
, the former Chairman and founder of the firm Bernard L. Madoff Investment Securities LLC, admitted that the wealth management arm of his business was an elaborate .}} Madoff founded the firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest. Madoff's business was one of the top s on Wall Street and in 2008 was the sixth-largest. Questions about his firm were raised as early as 1999. Alerted by his sons, federal authorities arrested Madoff on December 11, 2008. On March 12, 2009, Madoff pleaded guilty to 11 federal crimes and admitted to operating the largest private Ponzi scheme in history. On June 29, 2009, he was sentenced to 150 years in prison with restitution of $170 billion. According to the original federal charges, Madoff said that his firm had "liabilities of approximately 50 billion". Prosecutors estimated the size of the fraud to be $64.8 billion, based on the amounts in the accounts of Madoff's 4,800 clients as of November 30, 2008. Ignoring s and taxes paid on fictitious profits, half of Madoff's direct investors lost no money, with Madoff's repeated (and repeatedly ignored) , , estimating that at least $35 billion of the money Madoff claimed to have stolen never really existed, but was simply fictional profits he reported to his clients. Investigators have determined others were involved in the scheme. The (SEC) has also been criticized for not investigating Madoff more thoroughly. Madoff's personal and business asset freeze created a chain reaction throughout the world's business and philanthropic community, forcing many organizations to at least temporarily close, including the , the , and the . Background trader with $5,000,}} earned from working as a and sprinkler installer. His fledgling business began to grow with the assistance of his father-in-law, accountant Saul Alpern, who referred a circle of friends and their families. Initially, the firm made markets ( prices) via the 's . To compete with firms that were members of the trading on the stock exchange's floor, . At one point, Madoff Securities was the largest buying-and-selling " " at the NASDAQ.}} He was active in the (NASD), a self-regulatory securities industry organization, serving as the chairman of the and on the . In 1992, described him: Several family members worked for him. His younger brother, Peter, was senior managing director and chief compliance officer, and Peter's daughter, , was the compliance attorney. Madoff's sons, Mark and Andrew, worked in the trading section, along with Charles Weiner, Madoff's nephew. Andrew Madoff had invested his own money in his father's fund, but Mark stopped in about 2001. Federal investigators believe the fraud in the investment management division and advisory division may have begun in the 1970s. However, Madoff himself stated his fraudulent activities began in the 1990s. In the 1980s, Madoff's market-maker division traded up to 5% of the total volume made on the . Madoff was "the first prominent practitioner" of , paying brokers to execute their clients' orders through his brokerage, a practice some have called a "legal ". This practice gave Madoff the distinction of being the largest dealer in NYSE-listed stocks in the U.S., trading about 15% of transaction volume. Academics have questioned the ethics of these payments. Madoff has argued that these payments did not alter the price that the customer received. He viewed payments for order flow as a normal business practice: "If your girlfriend goes to buy stockings at a supermarket, the racks that display those stockings are usually paid for by the company that manufactured the stockings. Order flow is an issue that attracted a lot of attention but is grossly overrated." The business occupied three floors of the , with the investment management division, referred to as the " ", employing a staff of approximately 24. Madoff ran a branch office in London that employed 28 people, separate from Madoff Securities. The company handled investments for his family of approximately 80 million. Two remote cameras installed in the London office permitted Madoff to monitor events from New York. Modus operandi In 1992, Bernard Madoff explained his purported strategy to The Wall Street Journal. He said the returns were really nothing special, given that the 500-stock index generated an average annual return of 16.3% between November 1982 and November 1992. "I would be surprised if anybody thought that matching the S&P over 10 years was anything outstanding." The majority of money managers actually trailed the S&P 500 during the 1980s. The Journal concluded Madoff's use of futures and options helped cushion the returns against the market's ups and downs. Madoff said he made up for the cost of the hedges, which could have caused him to trail the stock market's returns, with stock-picking and . Purported strategy consisting of purchasing s and taking contracts on them, sometimes called a split-strike conversion or a .}} *A blue chip is stock in a corporation with a national reputation for quality, reliability, and the ability to operate profitably in good times and bad. *In finance, an option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price. *In finance, moneyness is the relative position of the current price (or future price) of an underlying asset (e.g., a stock) with respect to the strike price of a derivative, most commonly a call option or a put option. "Typically, a position will consist of the ownership of 30–35 S&P 100 stocks, most correlated to that index, the sale of 'calls' on the index and the purchase of out-of-the-money 'puts' on the index. The sale of the 'calls' is designed to increase the , while allowing upward movement of the stock portfolio to the of the 'calls'. The 'puts', funded in large part by the sales of the 'calls', limit the portfolio's downside." In his 1992 "Avellino and Bienes" interview with The Wall Street Journal, Madoff discussed his supposed methods: In the 1970s, he had placed invested funds in "convertible positions in stocks, with promised investment returns of 18% to 20%", and in 1982, he began using on the stock index, and then placed s on futures during the . had been unable to replicate the Madoff fund's past returns using historic price data for U.S. stocks and options on the indexes. Barron's raised the possibility that Madoff's returns were most likely due to his firm's brokerage clients.}} *Front running, also known as tailgating, is the prohibited practice of engaging in a Personal Securities Transaction to capitalize on advance, nonpublic knowledge of a large pending transaction for a client's account that will influence the price of the underlying security. Mitchell Zuckoff, professor of journalism at and author of Ponzi's Scheme: The True Story of a Financial Legend, says that "the 5% payout rule", a federal law requiring to pay out 5% of their funds each year, allowed Madoff's Ponzi scheme to go undetected for a long period since he managed money mainly for charities. Zuckoff notes, "For every $1 billion in foundation investment, Madoff was effectively on the hook for about $50 million in withdrawals a year. If he was not making real investments, at that rate the would last 20 years. By targeting charities, Madoff could avoid the threat of sudden or unexpected withdrawals. Madoff's operation differed from a typical Ponzi scheme. While most Ponzis are based on nonexistent businesses, Madoff's brokerage operation was very real. Sales methods Rather than offer high returns to all comers, Madoff offered modest but steady returns to an exclusive clientele. The investment method was marketed as "too complicated for outsiders to understand". He was secretive about the firm's business, and kept his s closely guarded. The reported that Madoff "worked the so-called ' ish circuit' of well-heeled Jews he met at s on and in ". (The scandal so affected Palm Beach that, according to , residents "stopped talking about the local destruction the Madoff storm caused only when came along" in 2016.) reported that Madoff courted many prominent Jewish executives and organizations and, according to the , they "trusted Madoff because he is Jewish". One of the most prominent promoters was , whose fund steered $1.8 billion towards Madoff's firm. A scheme that targets members of a particular religious or ethnic community is a type of , and a article identified Madoff's scheme as "an affinity Ponzi". Madoff was a "master marketer", and his fund was considered exclusive, giving the appearance of a "velvet rope". He generally refused to meet directly with investors, which gave him an " " aura and increased the allure of the investment. Some Madoff investors were wary of removing their money from his fund, in case they could not get back in later. were "unusually consistent", around 10%, and were a key factor in perpetuating the fraud.}} Ponzi schemes typically pay returns of 20% or higher, and collapse quickly. One Madoff fund, which described its "strategy" as focusing on shares in the 's 100-stock index, reported a 10.5% annual return during the previous 17 years. Even at the end of November 2008, amid a general market collapse, the same fund reported that it was up 5.6%, while the same year-to-date total return on the S&P 500-stock index had been negative 38%. An unnamed investor remarked, "The returns were just amazing and we trusted this guy for decades — if you wanted to take money out, you always got your check in a few days. That's why we were all so stunned." explained that because of Madoff's huge volume as a , the bank believed he had a perceived edge on the market because his trades were timed well, suggesting they believed he was .}} Previous investigations Avellino and Bienes In 1992, the SEC investigated one of Madoff's s, Avellino & Bienes, the principals being Frank Avellino, Michael Bienes and his wife Dianne Bienes. Bienes began his career working as an accountant for Madoff's father-in-law, Saul Alpern. Then, he became a partner in the accounting firm Alpern, Avellino and Bienes. In 1962, the firm began advising its clients about investing all of their money with a mystery man, a highly successful and controversial figure on Wall Street—but until this episode, not known as an ace money manager—Madoff. When Alpern retired at the end of 1974, the firm became Avellino and Bienes and continued to invest solely with Madoff. , Madoff's former attorney, were accused of selling unregistered securities. In a report to the SEC they mentioned the fund's "curiously steady" yearly returns to investors of 13.5% to 20%.}} However, the SEC did not look any more deeply into the matter, and never publicly referred to Madoff. Through Sorkin, who once oversaw the SEC's New York office, Avellino & Bienes agreed to return the money to investors, shut down their firm, undergo an audit, and pay a fine of $350,000. Avellino complained to the presiding Federal Judge, , that fees were excessive, but the judge ordered him to pay the bill of $428,679 in full. Madoff said that he did not realize the feeder fund was operating illegally, and that his own investment returns tracked the previous 10 years of the . The SEC investigation came right in the middle of Madoff's three terms as the chairman of the NASDAQ stock market board. The size of the pools mushroomed by word-of-mouth, and investors grew to 3,200 in nine accounts with Madoff. Regulators feared it all might be just a huge scam. "We went into this thinking it could be a major catastrophe. They took in nearly a half a billion dollars in investor money, totally outside the system that we can monitor and regulate. That's pretty frightening," said Richard Walker, who at the time was the SEC's New York regional administrator. Avellino and Bienes deposited $454 million of investors' money with Madoff, and until 2007, Bienes continued to invest several million dollars of his own money with Madoff. In a 2009 interview after the scam had been exposed, he said, "Doubt Bernie Madoff? Doubt Bernie? No. You doubt God. You can doubt God, but you don't doubt Bernie. He had that aura about him." Bernard L. Madoff Securities LLC In 2001, an SEC official met with at their Boston regional office and reviewed his allegations of Madoff's fraudulent practices. The SEC claimed it conducted two other inquiries into Madoff in the last several years, but did not find any violations or major issues of concern. The SEC detailed that inspectors had examined Madoff's brokerage operation in 2005, checking for three kinds of violations: the strategy he used for customer accounts; the requirement of brokers to obtain the best possible price for customer orders; and operating as an unregistered . Madoff was registered as a , but doing business as an . "The staff found no evidence of fraud". In September 2005 Madoff agreed to register his business, but the SEC kept its findings confidential. During the 2005 investigation, Meaghan Cheung, a branch head of the SEC's New York's Enforcement Division, was the person responsible for the oversight and blunder, according to Harry Markopolos, who testified on February 4, 2009, at a hearing held by a . FINRA (FINRA), the industry-run watchdog for brokerage firms, reported without explanation that parts of Madoff's firm had no customers.}} "At this point in time we are uncertain of the basis for FINRA's conclusion in this regard," SEC staff wrote shortly after Madoff was arrested. As a result, the chairman of the SEC, , stated that an investigation will delve into "all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm". A former SEC compliance officer, Eric Swanson, married Madoff's niece Shana, a Madoff firm compliance attorney. Red flags Thorp complained in 1991. The second case of concerns about Madoff's operation was raised in May 2000, when , a financial analyst and portfolio manager at Boston options trader Rampart Investment Management, alerted the SEC about his suspicions. A year earlier, Rampart had found out that , one of its trading partners, had significant investments with Madoff. He told the SEC that based on his analysis of Madoff's returns, it was mathematically impossible for Madoff to deliver them using the strategies he claimed to use. In his view, there were only two ways to explain the figures—either Madoff was front running his order flow, or his wealth management business was a massive Ponzi scheme. This submission, along with three others, passed with no substantive action from the SEC. At the time of Markopolos' initial submission, Madoff managed assets from between $3 billion and $6 billion, which would have made his wealth management business the largest hedge fund in the world even then. The culmination of Markopolos' analysis was his third submission, a detailed 17-page memo entitled The World's Largest Hedge Fund is a Fraud. He had also approached The Wall Street Journal about the existence of the Ponzi scheme in 2005, but its editors decided not to pursue the story. The memo specified 30 numbered red flags based on 174 months (a little over 14 years) of Madoff trades. Markopolos argued that the markets were far too volatile even under the best of conditions for this to be possible, a fact that would have been clear to anyone who understood the underlying math. Later, Markopolos testified before Congress that this was like a baseball player batting .966 for the season "and no one suspecting a cheat". In part, the memo concluded: "Bernie Madoff is running the world's largest unregistered hedge fund. He's organized this business as a 'hedge ' privately labeling their own hedge funds which Bernie Madoff secretly runs for them using a split-strike conversion strategy getting paid only trading commissions which are not disclosed. If this is not a regulatory dodge, I do not know what is." Markopolos declared that Madoff's "unsophisticated " was either a Ponzi scheme or front running (buying stock for his own account based on knowledge of his clients' orders), and concluded it was most likely a Ponzi scheme. Madoff rejected any call for an outside "for reasons of secrecy", claiming that was the exclusive responsibility of his brother, Peter, the company's ". that to deliver 12% annual returns to the investor, Madoff needed to earn 16% gross, so as to distribute a 4% fee to the feeder fund managers, who Madoff needed to secure new victims,}} with the 4% ensuring these feeder fund managers would stay "willfully blind, and not get too intrusive". that had only one active accountant, , a close Madoff family friend. Friehling was also an investor in Madoff's fund, which was seen as a blatant conflict of interest.}} Typically, hedge funds hold their portfolio at a securities firm (a major bank or brokerage), which acts as the fund's . This arrangement allows outside investigators to verify the holdings. Madoff's firm was its own broker-dealer and allegedly processed all of its trades. Ironically, Madoff, a pioneer in , refused to provide his clients online access to their accounts. He sent out account statements by mail, unlike most hedge funds, which statements. Also in 2003, , "arguably the most successful hedge fund in the world", reduced its exposure to Madoff's fund first by 50 percent and eventually completely because}} of suspicions about the consistency of returns, the fact that Madoff charged very little compared to other hedge funds and the impossibility of the strategy Madoff claimed to use because options volume had no relation to the amount of money Madoff was said to administer. And only if Madoff was assumed to be responsible for all the options traded in the most liquid . Final weeks and collapse accelerated.}} *Madoff had previously come close to collapse in the second half of 2005 after , a group of hedge funds, was exposed as a Ponzi scheme that used a bogus accounting firm to misrepresent its performance. By November, investors had requested $105 million in redemptions, though Madoff's Chase account only had $13 million. Madoff only survived by moving money from his broker-dealer's account into his Ponzi scheme account. Eventually, he drew on $342 million from his broker-dealer's credit lines to keep the Ponzi scheme afloat through 2006. Markopolos wrote that he suspected Madoff was on the brink of as early as June 2005, when his team learned he was seeking loans from banks. By then, at least two major banks were no longer willing to lend money to their customers to invest it with Madoff. In June 2008, Markopolos' team uncovered evidence that Madoff was accepting . To Markopolos' mind, Madoff was running out of cash and needed to increase his promised returns to keep the scheme going. As it turned out, redemption requests from skittish investors ramped up in the wake of the collapse of in March 2008. The trickle became a flood when was in September, coinciding with the near-collapse of . Unknown to them, however, Madoff had simply deposited his clients' money into his business account at , and paid customers out of that account when they requested withdrawals. To pay off those investors, Madoff needed new money from other investors. However, in November, the balance in the account dropped to dangerously low levels. He had just barely enough in the account to meet his redemption payroll on November 19. Even with a rush of new investors who believed Madoff was one of the few funds that was still doing well, it still wasn't enough to keep up with the avalanche of withdrawals. In the weeks prior to his arrest, Madoff struggled to keep the scheme afloat. In November 2008, Madoff Securities International (MSIL) in London made two fund transfers to Bernard Madoff Investment Securities of approximately $164 million. MSIL had neither customers nor clients, and there is no evidence that it conducted any trades on behalf of third parties. With banks having all but stopped lending to anyone, he knew he could not even begin to borrow enough money to meet the outstanding redemption requests. , a 95-year-old Boston and entrepreneur who was one of Madoff's oldest friends and biggest financial backers.}} On December 4, he told , who oversaw the Ponzi scheme's operation, that he was finished. On December 9, he told Peter that he was on the brink of collapse. The following morning, December 10, he suggested to his sons, Mark and Andrew, that the firm pay out over $170 million in bonuses two months ahead of schedule, from $200 million in assets that the firm still had. According to the complaint, Mark and Andrew, reportedly unaware of the firm's pending insolvency, confronted their father, asking him how the firm could pay bonuses to employees if it could not pay investors. At that point, Madoff intended to take a week to wind up the firm's operations before his sons alerted authorities. Instead, Mark and Andrew immediately called lawyers. When the sons revealed their father's plan to use the remaining money to pay relatives and favored investors, their lawyers put them in touch with federal prosecutors and the SEC. Madoff was arrested the following morning. Investigation into co-conspirators Investigators were looking for others involved in the scheme, despite Madoff's assertion that he alone was responsible for the large-scale operation. and further suggested that there must have been a team buying and selling stocks, forging books, and filing reports. James Ratley, president of the said, "In order for him to have done this by himself, he would have had to have been at work night and day, no vacation and no time off. He would have had to nurture the Ponzi scheme daily. What happened when he was gone? Who handled it when somebody called in while he was on vacation and said, 'I need access to my money'?" s were for the securities that were being traded. You would need accountants so that the internal documents reconcile with the documents being sent to customers at least on a superficial basis," said Tom Dewey, a securities lawyer.}} Charges and sentencing The criminal case is U.S.A. v. Madoff, 1:08-mJ-02735. The case is Securities and Exchange Commission v. Madoff, 1:08-cv- 10791, both U.S. District Court, Southern District of New York. The cases against Fairfield Greenwich Group et al. are consolidated as 09-118 in U.S. District Court for the Southern District of New York (Manhattan). While awaiting sentencing, Madoff met with the SEC's , , who was conducting an investigation into how regulators failed to detect the fraud despite numerous red flags. Because of concerns of improper conduct by Inspector General Kotz in the Madoff investigation, Inspector General of the was brought in to conduct an independent outside review. The Williams Report questioned Kotz's work on the Madoff investigation, because Kotz was a "very good friend" with Markopolos. Investigators were not able to determine when Kotz and Markopolos became friends. A violation of the ethics rule took place if the friendship was concurrent with Kotz's investigation of Madoff. estimated the actual net fraud to be between $10 and $17 billion, because it does not include the fictional returns credited to the Madoff's customer accounts.}} Criminal complaint U.S. v. Madoff, 08-MAG-02735. It is unclear exactly how much investors deposited into the firm." He was originally charged with a single count of securities fraud and faced up to 20 years in prison, and a fine of $5 million if convicted. Court papers indicate that Madoff's firm had about 4,800 investment client accounts as of November 30, 2008, and issued statements for that month reporting that client accounts held a total balance of about $65 billion, but actually "held only a small fraction" of that balance for clients. Madoff was arrested by the (FBI) on December 11, 2008, on a of . According to the criminal complaint, the previous day he had told his sons that his business was "a giant Ponzi scheme". They called a friend for advice, Martin Flumenbaum, a lawyer, who called federal prosecutors and the SEC on their behalf. FBI Agent Theodore Cacioppi made a house call. "We are here to find out if there is an innocent explanation," Cacioppi said quietly. The 70-year-old paused, then said: "There is no innocent explanation." He had "paid investors with money that was not there". Madoff was released on the same day of his arrest after posting $10 million . Madoff and his wife surrendered their passports, and he was subject to travel restrictions, a 7 p.m. at his co-op, and as a condition of bail. Although Madoff only had two co-signers for his $10 million bail, his wife and his brother Peter, rather than the four required, a judge allowed him free on bail but ordered him confined to his apartment. Madoff has reportedly received s that have been referred to the FBI, and the SEC referred to fears of "harm or flight" in its request for Madoff to be confined to his Upper East Side apartment. Cameras monitored his apartment's doors, its communication devices sent signals to the FBI, and his wife was required to pay for additional security. Apart from 'Bernard L. Madoff' and 'Bernard L. Madoff Investment Securities LLC ("BMIS")', the order to freeze all activities also forbade trading from the companies Madoff Securities International Ltd. ("Madoff International") and Madoff Ltd. On January 5, 2009, prosecutors had requested that the Court revoke his bail, after Madoff and his wife allegedly violated the court-ordered asset freeze by mailing jewelry worth up to $1 million to relatives, including their sons and Madoff's brother. It was also noted that $173 million in signed checks had been found in Madoff's office desk after he had been arrested. His sons reported the mailings to prosecutors. Previously, Madoff was thought to be cooperating with prosecutors. The following week, Judge Ellis refused the government's request to revoke Madoff's bail, but required as a condition of bail that Madoff make an inventory of personal items and that his mail be searched. filed an 11-count criminal information, or complaint, charging Madoff with 11 federal crimes: , fraud, , , three counts of , false statements, , making false filings with the SEC, and theft from an . The complaint stated that Madoff had defrauded his clients of almost $65 billion – thus spelling out the largest Ponzi scheme in history, as well as the largest investor fraud committed by a single person.}} .}} Prosecutors allege that he used the London Office, Madoff Securities International Ltd. to launder more than $250 million of client money to support the U.S. trading operation of Bernard L. Madoff Investment Securities LLC. Madoff gave the appearance that he was trading in Europe for his clients. Plea proceeding between the government and Madoff; he simply pleaded guilty and signed a of . The charges carried a maximum sentence of 150 years in prison, as well as mandatory and up to twice the gross gain or loss derived from the offenses. If the government's estimate is correct, Madoff will have to pay $7.2 billion in restitution.}} A month earlier, Madoff settled the SEC's civil suit against him. He accepted a lifetime ban from the securities industry, and also agreed to pay an undisclosed fine. was under .}} In his pleading , Madoff admitted to running a Ponzi scheme and expressed regret for his "criminal acts". He stated that he had begun his scheme some time in the early 1990s. He wished to satisfy his clients' expectations of high returns he had promised, even though it was during an . He admitted that he hadn't invested any of his clients' money since the inception of his scheme. Instead, he merely deposited the money into his business account at . He admitted to false trading activities masked by foreign transfers and false SEC returns. When clients requested account withdrawals, he paid them from the Chase account, claiming the profits were the result of his own unique "split-strike conversion strategy". He eventually reconciled himself to being exposed as a fraud. Only two of at least 25 victims who had requested to be heard at the hearing spoke against accepting Madoff's plea of guilt. Judge accepted his guilty plea and remanded him to incarceration at the until sentencing. Chin said that Madoff was now a substantial flight risk given his age, wealth and the possibility of spending the rest of his life in prison. Madoff's attorney, filed an , to return him back to his "penthouse arrest", await sentencing, and to reinstate his bail conditions, declaring he would be more amenable to cooperate with the government's investigation, and prosecutors filed a notice in opposition. On March 20, 2009, the appellate court denied his request. His wife Ruth will relinquish her claim to $80 million worth of assets, leaving her with $2.5 million in cash. The settlement does not prevent the SEC and Picard to continue making claims against Mrs. Madoff's funds in the future. Madoff had earlier requested to shield $70 million in assets for Ruth, arguing that it was unconnected to the fraud scheme. Sentencing and prison life They informed Chin that , the trustee overseeing bankruptcy proceedings for the Madoff organization, had indicated that "Mr. Madoff has not provided meaningful cooperation or assistance." The Bureau of US Prisons had recommended 50 years, while defense lawyer had recommended 12 years, arguing that Madoff had confessed. The judge granted Madoff permission to wear his personal clothing at sentencing. Chin said he had not received any mitigating letters from friends or family testifying to Madoff's good deeds, saying that "the absence of such support is telling." Commentators noted that this was in contrast to other high-profile white collar trials such as that of , , and who were known for their philanthropy and/or cooperation to help victims; however Madoff's victims included several charities and foundations, and the only person that pleaded for mercy was defense lawyer Ira Sorkin. Chin called the fraud "unprecedented" and "staggering", and stated that the sentence would deter others from committing similar frauds. He stated, "Here the message must be sent that Mr. Madoff's crimes were extraordinarily evil." Many victims, some of whom had lost their life savings, applauded the sentence. Chin agreed with prosecutors' contention that the fraud began at some point in the 1980s. He also noted Madoff's crimes were "off the charts" since federal sentencing guidelines for fraud only go up to $400 million in losses; Madoff swindled his investors out of several times that. more than 32 times the federal cap; the commonly quoted loss of $65 billion is more than 162 times the cap. Chin said "I have a sense Mr. Madoff has not done all that he could do or told all that he knows," noting that Madoff failed to identify accomplices, making it more difficult for prosecutors to build cases against others. Chin dismissed Sorkin's plea for leniency, stating that Madoff made substantial loans to family members and moved $15 million from the firm to his wife's account shortly before confessing. Picard also said that Madoff's failure to provide substantial assistance complicated efforts to locate assets. A former federal prosecutor suggested Madoff would have had the possibility of a sentence with parole if he fully cooperated with investigators, but Madoff's silence implied that there were other accomplices in the fraud, which led the judge to impose the maximum sentence. Madoff apologized to his victims at the sentencing, saying, "I have left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. This is something I will live in for the rest of my life. I'm sorry. ... I know that doesn't help you." Madoff was incarcerated at outside . His inmate number is #61727-054. On July 28, 2009, he gave his first jailhouse interview to Joseph Cotchett and Nancy Fineman, attorneys from San Francisco, because they threatened to sue his wife, Ruth, on behalf of several investors who lost fortunes. During the 4 hour session, he "answered every one of attorneys' questions", and expressed remorse, according to Cotchett. References Category:Monetary system